WASHINGTON — Four Republican House members reintroduced a bill targeting China’s fixed exchange rate policy on Tuesday, as the chorus against the country’s trade practices grew louder on Capitol Hill.
Reps. Phil English (R., Pa.), Robin Hayes (R., N.C.), Mark Green (R, Wis.) and Chris Chocola (R., Ind.) introduced an “updated” version of a bill submitted during the last session of Congress and now titled the “Currency Harmonization Initiative through Neutralizing Action Act of 2005.”
The legislation aims to impose tariffs if the Treasury Department finds China’s exchange-rate policy fits into the World Trade Organization’s definition of currency manipulation.
The “CHINA Act” would direct the Treasury Secretary to, within 60 days of enactment, analyze and report to Congress whether China “manipulates” its currency by pegging it to the dollar.
China has maintained an exchange rate of 8.28 yuan to $1 since 1995. U.S. manufacturers and lawmakers complain that China artificially undervalues the yuan, lowering prices of exports by as much as 40 percent and putting U.S. companies at a competitive disadvantage.
“Our legislation sets a standard by which China would be forced to meet WTO standards or will face clear and definable tariff penalties,” English said at a press conference in the Capitol. “We believe this legislation, by introducing it with 22 co-sponsors, is going to send a very clear message to the Chinese that Congress no longer will sit back and see our manufacturers take hits from a grossly unfair process.”
Treasury Secretary John Snow recently warned China that failing to reform its monetary policy could lead it to be labeled a “manipulator” of currency, which could lead to WTO involvement and potential sanctions.
The CHINA Act is the fifth such bill introduced this session relating to China and its currency and it is difficult to gauge how much traction it will have among competing bills, although a groundswell of Congressional support has risen to take more aggressive action against China. Lawmakers also appear to have more leverage in this session in light of the pressure on the administration to find enough votes to get the Central American Free Trade Agreement approved.
Rep. Bill Thomas (R., Calif.), chairman of the House Ways & Means Committee, recently said Congress should consider taking legislative action against China’s currency policy as a way to prod China into adopting a more flexible exchange rate and to sway key lawmakers into the CAFTA camp. English said he agrees with Thomas that it would be helpful to have “a substantive vote on China trade” in the context of the CAFTA debate.
Hayes, who represents textile producers in a state that has lost thousands of sector jobs, said he has received assurances from U.S. Trade Representative Rob Portman that he is “interested in moving this type of fair-trade legislation” forward. He said, “There are a lot of things that influence me and relate to how they affect [my constituents] and whether they create new jobs,” adding that he is “leaning no” on CAFTA.
Meanwhile, a coalition of business groups, including representatives from the American Manufacturing Trade Action Coalition and National Textile Association, joined members of Congress Tuesday on the Hill to voice their opposition to CAFTA and publicize a letter they have sent to the President detailing the detriment to the manufacturing base they believe the pact poses.
In an interview after the news conference, Rep. Walter Jones (R., N.C.), said he doesn’t believe the Bush administration will swing many votes among House textile-state lawmakers with three pledges it made to win the endorsement of the National Council of Textile Organizations. Sen. Elizabeth Dole (R., N.C.) cited those pledges and others as a factor in her decision to vote for CAFTA if it comes to a vote.